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HMRC internal manual

Video Games Development Company Manual

HM Revenue & Customs
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Eligible expenditure: non-core expenditure

S1276AE, S1217CG Corporation Tax Act 2009

Video Games Tax Relief (VGTR) in respect of a video game trade by a Video Games Development Company (VGDC) is only available on elements of core expenditure (VGDC50010) which is also EEA European Economic Area (EEA) expenditure.

Not all EEA expenditure is core expenditure. Some elements of EEA expenditure will not be core expenditure because they relate to initial design stage activities or commercial exploitation of the video game.

For example, the extent to which artwork is used as part of the process of establishing the commercial viability of the video game is initial concept design activity. It is not core expenditure and not eligible for VGTR.

Expenditure on advertising a video game is not development expenditure and therefore not core expenditure. This would include producing promotional spots for the video game, such as trailers which may not include actual game footage.

This expenditure will still be included in the profits and losses of the video game trade. It is simply not eligible for VGTR.